Australian Company Sues US Contractor on Iraq Deal

Morris Corporation, owned by Brisbane-based Robert McVicker, is suing one of the biggest US military contractors, Kellogg Brown & Root (KBR), for millions of dollars following the abrupt termination of an Iraq deal in mid-2003.

According to the report from the Sydney Morning Herald, the Australian company that provides mass catering for US troops and other organisations in crisis regions, wants KBR to hand over more than $US27 million that it says remains unpaid for work done in Iraq in 2003 when Morris and a Kuwaiti company jointly agreed to set up dining facilities for US forces.

Mr McVicker has told BusinessDay this is the second time the issue has gone to court after years of trying to extract repayment.

”To hell with KBR,” Mr McVicker said. ”I don’t have any respect for them at all. They think they are such a big global conglomerate and that we will buckle, but to hell with them.”

In documents filed in a US court, Morris and the Kuwaiti Company for Process Plant Construction (KCPC) claim KBR did not do as it had promised and champion with the US government their claim for reimbursement because KBR feared it would generate more bad publicity about its Iraq contracts.

Kellogg Brown & Root remains in the sights of the US government for allegedly exorbitant claims and for lodging claims for services that were not authorised.

The US government filed suit against KBR earlier this year, saying the multibillion-dollar engineering and military contractor group submitted claims for unauthorised private security detachments for its subcontractors.

In documents filed in the US District Court in Virginia, Morris and KCPC say they were commissioned by KBR in June 2003 to cater for thousands of US troops stationed near the city of Tikrit. But Kellogg Brown & Root ended the deal after just six weeks. Negotiations over payment continued until November 2006 when KBR paid the pair $US17.4 million and then submitted a $US29.76 million claim to the US government on their behalf. Morris and KCPC contend Kellogg Brown & Root did not push the claim vigorously with the US government and instead allowed it to ”languish” until September 2010, when KBR ”inexplicably withdrew the entire claim”.

They claim KBR told them it withdrew ”because KBR was under intense scrutiny by the government and the media with respect to its contracts with the government for operations in Iraq”.

”KBR desired to avoid pressing the joint venture’s claims against the government for fear that doing so would attract unwanted attention and publicity to KBR,” the companies contend.

”Essentially, KBR chose to breach its settlement agreement with the joint venture rather than risk additional investigations and allegations.

”Eight years since the work was performed and six years since KBR agreed to pursue KCPC/Morris’s claim, no claim is before the government and there is no current prospect that KCPC/Morris will ever be paid for that work.”

In response, Kellogg Brown & Root denies it feared bad publicity, although it admits the US government asked ”a number of significant questions” about the claim. It says it backed off ”pending further evaluation of the claim in light of the questions asked by the government”.

KBR says it told Morris and KCPC that it would support a claim for ”significantly less” than the original sum but that the two subcontractors either did not agree to this or did not submit a different claim.

Kellogg Brown & Root is countersuing Morris and KCPC, saying it has incurred costs in pursuing the claim.